The global credit card payment market is expected to grow at a CAGR of approximately 8.5% during the forecasted period, i.e., 2021–2028, with an estimated revenue of USD 263,473 million.
An estimated 2.8 billion credit cards are used worldwide, and approximately 185 million Americans own at least one credit card. A credit card allows the cardholder to borrow money from a financial organization, usually a bank; cardholders agree to repay the money along with interest, according to the rules. Further, it can help businesses establish a sturdy credit history by allowing them to acquire equipment, materials, or inventory that they require, making it easier for them to obtain loans based on their credit score.
The rise in credit card demand among developing countries along with an increasing population and rise in disposable income has a positive impact on market growth. Currently, there are 1.06 billion credit cards in use in the U.S.; however, factors such as an increase in credit card fraud worldwide are expected to impede the growth of the credit card payments market. On the contrary, technological advancements in product offerings, such as the use of blockchain for increased security, are expected to provide lucrative opportunities for market expansion during the forecast period.
Attractive offers on credit card usage, growing acceptance of credit cards, increasing co-branded card offerings, the rising spending power of millennials and Gen Z, and a gradual shift of people towards cashless transactions are the factors driving the growth of this market. Further, accelerated digital transactions have boosted the Credit Card market. The digital payments market in India is expected to more than double to USD 135.2 billion by 2023, up from USD 64.8 billion this year, according to industry body ASSOCHAM paving the way for the growth of the credit card payment market.
The use of credit cards is increasing due to digitization and the increased use of online shopping, which enables merchants to reduce transaction costs while increasing revenue through online transactions. In order to attract a large consumer base for a prepaid credit card, major corporations focus on offering digital prepaid card services in emerging economies. The credit card payment market is expected to expand in the coming years due to digitization.
Credit card usage has increased, which has increased credit card terminal sales. MasterCard, for example, pioneered tap-and-go subway stations and Fareback Friday, which allow cardholders to tap their contactless card at any participating New York City subway. Further, the popularity of digital-first credit cards at the point of sale for those with poor or fair credit, such as Apple cards, is growing. Apple cardholders earn rewards by using the mobile version of the card rather than the physical titanium card.
Developing countries such as India, China, and others have a sizable working population with an ever-increasing disposable income; the increasing acceptance of digital payment systems by the working population drives the credit card payments market's growth. The world is seeing an increase in the use of credit cards, particularly in developing countries with a growing population. It is due to an increased disposable income, an increasing debit card usage, and the convenience of credit card payment.
In order to meet the market's growing demands, global payment companies are developing innovative solutions to meet customer needs. Additionally, several governments are concentrating on improving end-user adoption of digital payments to combat the spread of coronavirus, which supports the market's growth. Global credit card payment volume continues to grow at a steady rate.
The credit card payment market is divided into general-purpose and specialty and other. General-purpose credit cards are expected to dominate the market share in the forecast period. In 2019, there were around 45 billion general-purpose credit card transactions in the United States, totaling nearly USD 4 trillion in monetary value. This segment’s growth is due to the special discounts, cashback, and reward points, collected while making purchases using a credit card.
In 2018, general-purpose credit card payments totaled USD 3.64 trillion, a 9.1% increase over 2015. According to the 2019 Federal Reserve Payments Study, the total number of general-purpose credit card transactions in the U.S. in 2018 was 40.9 billion. They accounted for 91.5% of all credit card payments, compared to 8.5% for private label cards. General-purpose credit cards are the most commonly accepted mode of payment worldwide, allowing cardholders to enjoy the benefits of using credit cards anywhere.
The credit card payment market is categorized into Visa, MasterCard, and Others by brand type. The most widely accepted credit card networks are Visa and Mastercard. Visa credit cards are accepted at 44 million merchant locations in more than 200 countries and territories worldwide, while Mastercard credit cards are accepted at 37 million merchant locations in more than 210 countries and territories.
Visa is the largest of the four main credit card networks in the United States. Visa's credit payments volume in the United States reached USD 1.97 trillion for 12 months ending December 30, 2020. At the end of September 2020, there were 343 million Visa credit cards in circulation in the United States and 798 million Visa credit cards outside of the United States. While both Visa and Mastercard are accepted virtually everywhere worldwide, Visa cards offer more benefits than Mastercard cards, resulting in their large market share.
The pandemic has far-reaching ramifications in all aspects of society. Compared to other industries, the impact on the credit card industry has been relatively mild, and the value of on-demand liquidity is more clear to customers. However, the industry's profitability has suffered significantly. Reduced international travel has impacted the foreign currency fees, which are a primary source of revenue for credit card companies.
Similarly, borrowers' stresses have resulted in significant increases in bad debt. Since the lockdown, consumers have shifted their spending from credit cards to debit cards as they pause larger purchases and use debit cards to pay for groceries, utilities, and other essential products and services.
According to the Reserve Bank of India data, credit card spending was Rs. 42,818 crores in June 2020, i.e., lower than the value of debit card Point of Sale (PoS) transactions, which was Rs 47,255 crore (RBI). For a prolonged period, only the sale of essential items was permitted. However, as the lockdowns were eased and the travel and retail activities increased, the market growth is expected to spur.
North America was the dominant region in the credit card payments market in 2020, and it is predicted to maintain its position during the forecasting period. It can be ascribed to several variables, including the quick adoption of credit cards in the region's economy. Credit cards are carried by 70% of the population of the United States, with 34% of Americans owning three or more cards in their possession. The majority of Americans have many credit cards, most likely because doing so will raise their credit limits as funds are distributed around various outlets.
On the other hand, Europe is expected to grow significantly during the forecast period due to the increase in loyalty programs and credit card reward points offered by companies to increase their market share, as well as the growing popularity of credit cards among the youths of developed nations such as the United Kingdom, Germany, and others. Additionally, since people in this region are more reliant on cash transactions, many credit card providers offer various promotions to grow their market share and income opportunities, which creates a lucrative possibility for the region's market.
December 2021- American Express, along with Nova Credit, announced the expansion of credit access to people who have moved to the United States from Brazil, the Dominican Republic, Kenya, and Nigeria. The expansion of this first-of-its-kind digital capability allows newcomers from nine countries to use their international credit history to apply for personal American Express® Cards and begin building U.S. credit history quickly and easily.
December 2021- As interest in cryptocurrency and digital assets grows, a new cohort joins the Mastercard Start Path Crypto startup engagement program, which is dedicated to exploring and solving real-world problems for people and businesses all over the world through the use of blockchain technology. Ava Labs, Envel, Kash, LVL, and NiftyKey are the five new startups to join the program, according to Mastercard.